Are you looking for financial relief?

A reverse mortgage might be for you By Flynt Lincoln, CAPS, CSA Special to PRIME For a growing number of homeowners age 62+ it's right under your roof. More and more people are taking the time to learn about reverse mortgages. Why? Because it gives you a great deal of financial flexibility and security. What are some of the benefits? 1. You are allowed to borrow against a percentage of your home value with no required payment as long as your home continues to be your primary residence; 2. The interest rate is very low and directly tied to the Federal one-year Treasury rate ; 3. All proceeds are tax free and not considered income; 4. Income and credit history are not considered for approval; 5. No personal liability on the part of the borrowers; 6. HUD insured; 7. Title remains in the borrowers name; 8. No restrictions on the use of the funds; 9. No prepayment penalty;; 10. Durable Power of Attorney are eligible; 11. "Life use" provisions are acceptable. How does a reverse mortgage work? Only a portion of your home value is available through a reverse mortgage. This is dependent on three factors. Those factors are: the age of the youngest borrower (62 is the minimum age); the value of your home or the FHA county lending limit (which ever is less);;and the current interest rate at the time you apply or close your reverse mortgage. The older you are the more you're eligible for, the higher your home value or county limit the more you're eligible for, and the lower the interest rate the more you're eligible for. Please keep in mind the opposite is also true. Of these factors, the interest rate has the major influence. Right now the Treasury rates are just about at a 40-year low. That makes this an incredibly opportune time to consider a reverse mortgage. If interest rates increase just 1 percent the amount of the reverse mortgage proceeds would be reduced by about 15 percent. What if I don't need the money right now, is it still something I should consider? Absolutely. The proceeds can be left in a line of credit that will continue to grow tax free at the note rate plus a set percent. Other considerations There are closing costs which are typically paid from some of the proceeds of the reverse mortgage itself. There is some initial paperwork, and sometimes the kids won't inherent as much. Part of the closing cost pays for Federal mortgage insurance. This makes all reverse mortgage loans non recourse and effectively lowers the interest rate the lender can offer to you. Remember the lower the rate the better for you. Consumer safeguard disclosures and Federal regulations are a part of every FHA reverse mortgage and yes they require some paperwork. Reverse mortgages are becoming more popular every year. The best advice is to get all the facts from a competent source with uncompromising integrity. If a reverse mortgage sounds like it might be a good option for you, acting now, at today's low rates, probably means more money in your pocket. Flynt Lincoln, CAPS, CSA is a Reverse Mortgage Consultant for Webster Bank. He can be reached at: (413) 237-4653 or (860) 749-1390